The state budget usually plays second fiddle to the Federal budget however there were a few items worth noting in the most current Victorian State Budget including:

  • From 1 July 2017 property transfers between spouses involving commercial properties or investment properties will no longer be exempt from stamp duty. Therefore if you are planning on restructuring, you may wish to consider doing so prior to 1 July 2017.
  • Introduction of a vacant property tax of 1% of the property’s capital improved value
  • Introduction of yearly land tax valuations instead of every 2 years commencing 1 January 2019
  • Payroll tax free threshold to increase to $650,000 from 1 July 2018.
  • Lower payroll tax rate of 3.65% will apply form 1 July 2017 for employers who have at least 85% of their employees in regional locations.

On 9 May 2017, the Government announced an extension to the 2015-16 Budget measure providing an instant asset write-off provision for small business.

Small businesses can immediately deduct the business portion of most assets if they cost less than $20,000 and were purchased between 7:30PM on 12 May 2015 and 30 June 2018.

This deduction can be used for each asset that costs less than $20,000, whether new or second-hand. You can claim the deduction through your tax return, in the year the asset was first used or installed ready for use.

The current 'lock out' laws for simplified depreciation rules will continue to be suspended until 30 June 2018.

Please contact your LBW representative if you require further information in relation to this item

This is a reminder for everyone to check prior to 30 June 2017:

Concessional Contribution - Check that you haven’t breached the $30,000 employer contributions limit (or $35,000 if you are over 50 years) if you have been salary sacrificing into super. If you do want to claim the amount contributed, ensure that the amount has been cleared and receipted by your super fund’s bank account by 30th June 2017; and

Pensions - If you are receiving a pension from your super fund, please make sure you take at least the minimum pension amount required by 30 June 2017. Note that if you do not take at least the minimum pension, your super fund will not receive the pension tax exemption and will pay 15% tax rather than 0%. If you are unsure about your pension payment amount for the current year please contact us.

Please note that internet transactions made on Friday 30 June 2017 will most likely not be counted for the current year as the transaction receipt will be dated 1 or 3 July 2017, not 30 June 2017. If you have a self managed super fund and you need to make a contribution or make a pension payment we suggest writing a cheque and giving it to yourselves or LBW to bank it for you. This will satisfy the rules.

If you would like further information on these rules please contact Simon Flowers, Matthew Grapsas or Cathy Walley on 5221 6111.

Scott Morrison handed down his Federal Budget for 2017-18 last night. He believes the budget will secure better days ahead and uses the catch cries of Fairness, Opportunity and Security. According to the Treasurer we have choices to make and he believes the budget is a fair and responsible way back into surplus (year 2020/21). Many commentators have called it a “very labor budget”, “reset or reboot budget”, “buries the 2014 budget” which destroyed the Liberals and is a budget based on the “political reality of dealing with the senate”. As you would expect Chris Bowen Labor Shadow Treasurer, the greens and independants were not overly happy with the budget, with Chris Bowen calling it a “desparate, failed attempt at a catchup budget.”

The budget ultimately was a big spend on infrastructure, Health care, more pain for foreign investors, additional money for ATO and ACCC and a nice tax ($6.2b) on the 5 big banks in Australia (4 majors plus Macquarie).

The key big things missing from the budget was any real tax reform, however we got a fair bit of that last year through the enterprise tax cuts which have only just been passed thanks to Nick Xenaphon, CGT discount changes and negative gearing changes.

Key Items from the budget are:

Personal tax/Investing

  • Increase in medicare levy of 0.5% from 1/7/19 to help fund the shortfall in NDIS
  • Lapsing of 2% budget deficit levy for those earning over $180,000pa
  • Restriction on claim travel expenses for property investors from 1/7/17
  • Removing the availability of claiming depreciation deductions on P & E on purchase of property (ie Quantity Surveyors reports) from 9/5/17
  • New tax incentives for affordable housing through MIT and an increase in the CGT discount to 60% for certain housing

Businesses

  • An extension of the $20,000 immediate tax write-offs for small business (now <$10m turnover) until 30 June 2018
  • Tightening access to small business concessions from 1/7/17
  • Extension of Taxable Reporting Regime to contractors in the courier and cleaning industries from 1/7/18

International

  • Foreign tax residents and temporary tax residents will not be able to gain access to the main residence exemption on sale of a house in Australia
  • Foreign withholding tax regime has been expanded for sales of residential property by non residents by reducing the threshold to $750,000 properties and increasing the withholding tax rate to 12.5%
  • Investments to new property development will mean that the developers will be limited to selling less than 50% of the properties to non residents
  • Annual levy on vacant property held by non residents (at least $5,000)

Superannuation

  • Ability for any person if they are downsizing their home to put a max of $300,000 into super which will not be counted towards any contribution limits (be careful that you don’t lose your aged pension as a result)
  • Use of direct contributions into super for first home owners up to a max of $30,000 ($15,000pa) and then being able to withdraw it to buy the house
  • Inclusion of the borrowed amounts in your pension transfer balance cap for instalment warrants
  • Tightening of non arm’s length transactions for smsf

Infrastructure

  • $20b funding for national rail program including Geelong to Waurn Ponds line, Snowy Mountains Hydro Scheme, Brisbane rail link, new Western Sydney airport and study on a rail link for the Tullamarine Airport.

Health

  • Full funding of NDIS
  • Lifting the freeze on medicare
  • Increased hospital funding
  • Increased spending on mental health funding and research